Ukraine to Legalise and Regulate Cryptocurrencies

2018/11/04/ 09:18

The Ukrainian government confirmed their plans to establish a regulation to legalise cryptos in the region, according to an official statement.

The Ministry of Economic Development and trade have initiated a state policy in the field of digital assets. The purpose is to create a regulatory framework and clear conditions for how digital assets can be used in Ukraine. This new policy will be put in full effect by the end of 2021. In the broad sense, the new policy plans to legislate activities related to cryptocurrencies. Activities such as taxation, use of banking activities, ICOs and ITOs which currently falls in the shadow and often leads to negative consequences for stakeholders.

Regulatory framework – A Two-Part plan

During and throughout 2018 and 2019, the government of Ukraine will integrate a regulatory framework to govern the local cryptocurrency market. The state policy will force the exchanges to implement a Know Your Customer (KYC) procedure and an Anti-money Laundering (AML) system to help the authorities to oversee the market.

The second step will be initiated during 2020 – 2021, then the government will dive into the crypto mining industry, smart contract protocols, and taxation. The goal is to recognise cryptocurrencies as a true asset class and an established industry.

Denis Zarytsky, who is a researcher, stated that the government’s official document outlined a 5 per cent tax payable for individuals with cryptocurrency holdings which is a lot lower than other regions such as France and the UK that have over 10 per cent tax on cryptocurrency investments. The National Bank of Ukraine even considers creating a new Central Bank Digital Currency. A new digital currency would be useful since it will enable quicker and more cost effective fiat currency transfers throughout the country.

Regulations around the world

Ukraine is not the only country that is working on regulations. China’s internet information office released a draft a couple of weeks ago for regulations around blockchain startups. The proposal, if enforced, would represent one of the country’s first regulatory frameworks for the blockchain industry. South Korea is another country that introduced the thought of a global crypto regulation. An official from South Korea’s Financial Supervisory Service (FSS) proposed a greater international cooperation between regulators for cryptocurrencies and initial coin offerings. Yoon Suk-Heun, who is the governor of FSS made a statement of greater cooperation during the opening ceremony of the latest Integrated Financial Supervisors Conference (IFSC) that was held in Seoul and was attended by officials from 15 countries.

Many countries will be watching with keen interest to see how this new state policy performs. However, regulation clarity is an issue that the blockchain sector has been struggling with across the world. Ukraine is currently many steps ahead of several other major jurisdictions regarding their efforts relating to cryptocurrency and the adoption thereof.